A portion of the R2 million that former president Nelson Mandela
donated to Jacob Zuma's RDP Education Trust was used to pull Schabir Shaik's
Nkobi group out of debt, KPMG forensic director Johan van der Walt told the
Durban High Court on Wednesday.

van der Walt said that on October 2, 2000 Mandela endorsed to
Zuma a cheque of R2 million so that R1 million could be paid to the RDP
Education Trust and the remainder towards Development Africa. The back of the
cheque was signed by Mandela and endorsed: "Pay the account of Zuma."

The paper trail that Van der Walt has followed shows that a day
after Zuma paid R1 million into the trust, Shaik allegedly transferred R900 000
to Floryn Investments. The R900 000 was then transferred to the Nkobi group in a
"series of transfers".

van der Walt said the money was used by the Nkobi group to
"reduce overdrawn bank balances by R718 131 and as an investment of R146
820".

The remaining R100 000 was used to pay Zuma's debts. Apparently
Zuma was experiencing financial woes as a result of building his Nkandla
homestead.

Evidence suggests that Zuma may not have been aware of the
transfer, as two months later he wrote a R1 million cheque to Development
Africa. A week later Shaik stopped the payment.

In his plea explanation, Shaik, who acted as Zuma's financial
adviser, told the court that he knew of the R2 million donation but did not know
what Development Africa was. Later, he learnt that it was money intended for
"confidential ANC activities".

Shaik said he eventually learnt that the money was to fund the
care and welfare of tribal leaders and the Zulu royal family.

van der Walt said there was no evidence to suggest that Mandela
knew the money was not used for its intended purpose.

He later indicated that the financial statements of the Nkobi
group did not comply with Generally Accepted Accounting Practice. van der Walt's
team identified four main areas where Nkobi's annual financial statements were
misrepresented:

Incorrect reflection of the sale of a workshare right amounting
to R3,5 million for the financial year ending February 28, 1999;

Unjustified
revaluation of the investment in Prodiba amounting to R3 million for that year;

Unjustified write-off of "development expenditure" amounting to R1 282
027,63. This so-called development expenditure is represented by loan account
balances of Shaik and other group entities or related parties forming part of
the Nkobi group; and

Unjustified revaluation of the investment in Prodiba
amounting to R5 million for the financial year ended February 29, 2000.

According to the company's financial statements, the Nkobi group was technically
insolvent as a result of payments for or on behalf of Zuma. Even the company's
"daily cashflow analyses reflected instances of payments that were made or
which were due* in respect of and for Zuma".

While Shaik maintains he "loaned" money to Zuma as a
friend, the state claims that the transactions were allegedly corrupt and
fraudulent financial dealings, aimed at securing Zuma's influence in business
dealings.